Vertex (VERX) Q3 2024 earnings summary

Executive summary

• Q3 2024 revenue reached $170.4M, up 17.5% year-over-year, driven by strong software subscription growth, customer expansion, and exceeding guidance.

• Net income was $7.2M for Q3 2024, reversing a net loss in Q3 2023; adjusted EBITDA rose to $38.6M, with margin improving to 22.7%.

• Completed the acquisition of ecosio, expanding e-invoicing and EDI capabilities, and finalized Systax acquisition, both contributing to ARR and customer base.

• Previewed and launched new AI-driven features, including Copilot and Smart Categorization, to enhance tax automation.

• Vertex serves over 60% of the Fortune 500, supporting customers in more than 190 countries, with a marquee customer base across diverse industries.

Financial highlights

• Q3 2024 total revenue was $170.4M, up 17.5% year-over-year; organic revenue growth was 16.8%.

• Adjusted EBITDA reached $38.6M (22.7% margin), up 45.1% year-over-year.

• Free cash flow was $18.4M for Q3; $123.7M generated in the first nine months of 2024.

• Subscription revenue grew 20.6% to $146.3M; cloud revenue rose 29.9% to $71M.

• Annual recurring revenue (ARR) was $576.8M, up 19% year-over-year.

Outlook and guidance

• Q4 2024 revenue expected between $175M–$178M; full-year 2024 revenue guidance is $663.3M–$666.3M, with cloud revenue growth projected at 28–29%.

• Adjusted EBITDA for 2024 expected at $146.8M–$150.9M (22.4% margin).

• ecosio expected to contribute $16M revenue in 2025, with short-term EBITDA dilution.

• Management expects continued growth in cloud-based subscriptions and sufficient liquidity for long-term needs.